Archive for May, 2015

The security deposit refund from my last place came yesterday, and it was a pleasant surprise. It's been a few years, so I couldn't remember exactly how much it was, but expected around $250. It was 504.67! ($500, plus a small amount of interest, which is nice, less the last few days of water and electricity there before the move).

I think you know where that went… Already made the payment online, but the website said it won't be processed until Monday, so I will update the balances when that comes through officially. And maybe spell "principal" correctly this time around : )

Otherwise I spent $29 at a small local ethnic grocery store. This covered 5 multi-meal bags of rice noodles, four large 2-serving cans of bamboo shoots, 2 sleeves of garlic bulbs, a 2 lb bag of carrots, a 3lb bag of apples, 1 bunch cilantro, a 5-pack of authentic Asian ramen-style soups for lazy days, 18 eggs, and probably a couple of other things I'm forgetting. I already stocked up on frozen vegetables during a sale last week when I found myself driving to a less expensive town to visit some friends, and I have a box of waffle/pancake mix I've been craving lately. Hoping to keep additional grocery spending to a minimum for a while, apart from probably needing to pick up some coffee in a few days. I made a large batch of stir-fry for lunch yesterday and froze two Tupperware containers of it to take to work later this week.

The numbers updated after my last payment to get the interest down on the GP loan- 1,110 paid, of which $2.70 went to principle. Wooo! Go ahead and laugh, but this is the first payment that decreased the principle owed- actual progress! I'll take it. Of course interest will keep accruing, but from here out it should be a lot easier to get that the principle when making payments.

This loan is now considered significantly "paid ahead," so even though the automatic payments will continue monthly, my next payment is "due" in 2021. That's pretty horrifying if you stop to think about it- the government clearly predicts I will be in debt to them forever, mindlessly paying the minimum to cover interest for decades.

In other news, I'm off today (work random shifts instead of a traditional weekend/workweek schedule). Shouldn't be too spendy- I plan to spend most of the day at home cleaning and organizing, which will have the double benefit of making me less nuts when I can't find things that are still boxed up somewhere, and saving some money in the long run by not replacing things I just can't find.

I've been reading more of the archives from that Mr. Money Moustache blog I mentioned last time, and I really enjoy his point of view. Representative quote:

"It is ALL ridiculous. Your life and my life, and the lives of all of the normal people around us.
If you've ever bought a garment, vehicle or dwelling with "style" as even a remote consideration, or prepared a multi-course meal with "taste" as one of the factors, then congratulations - you live a big, wonderful, ridiculous life. If you have any means of transportation besides walking, congratulations again, because you've hit the big time. You have so many options open to you - so much flexibility to change your lifestyle, empower yourself, spend less, earn more, and move to new places as you see fit."

This is so true! I can never get over how easy, safe, clean, and comfortable American life generally is compared to all of human history, even on low incomes. We have magical shots that you can get one time as a baby to prevent you from getting illnesses that routinely killed half of everybody's children for most of history...and we're so accustomed to this magical quality of modern life that we have people who TURN THIS DOWN. There is so much extra money flying around our society that people will give routinely give unemployed 18 year olds (or in my case, 22 year olds) HUNDREDS OF THOUSANDS OF DOLLARS of loans with no collateral. Most of the time they don't even ask what specifically you plan on studying with this cash! That may not always work out, but what an incredible amount of working capital this country must have! And don't even get me started on all the insane things you can buy at the grocery store- wars have been fought over the trading routes to reach spices that somebody in small-town Nebraska can pick up for $2 without a thought.

I had another entry written, but then I stumbled across a very interesting article and decided to go with embarrassing but necessary honesty instead: I have been irrationally complacent, and I can’t even tell you why. I owe $13,669.14 at 7.6% interest, and do you know how much has been paid toward this debt on through the IBR repayment plan in the last two years? The online statement has it right here in black and white: $374.24. In that two years, how many unnecessary things have I thoughtlessly wasted money on? How many times have I bought breakfast or a snack at work through sheer laziness even though there was food at home? I've never thought of myself as the type of person who buries their head in the sand before- this article was really a wake-up call.

The link is here, with the caveat that tough love works for me, but it's hard to read: http://www.mrmoneymustache.com/2012/04/18/news-flash-your-debt-is-an-emergency/#comments

So now what?

I'll eventually be paid $670 for a recent side job- they can be slow mailing the checks out, so I'll pay this toward my GradPlus loan now and refund it back into the account when that eventually shows up. I tend to keep a certain amount of cash on hand in case it's needed when the bank is closed, etc, but if I'm being honest, it's probably an unnecessary amount. Since that money isn't earning 7.6% interest, I'll deposit and apply some of that as well. Last week I was paid back for picking some things up for a friend while running errands, $80 cash, which can be another snowflake.

Right now the interest in that account comes to 1107.30, so in the spirit of recognizing the urgency, I'm adding another $160 from savings to make a total payment of $1110. From here on out, I should start seeing some payments actually applied to principle!

I'll update the official numbers when the payment finishes processing and shows up on the website, since I'm not sure which day they add in the new interest.

This month was unusual financially, with a lot of one-time expenses, so my new monthly budget will really start in June. It's still a work in process, but here is a rough outline of what I am picturing:

That utility number looks high, but I don't know what it will be in the new place yet. When I called to switch the account to my name, they told me the recent monthly average for this unit has been $130/month; utilities prior to moving ran me 30-40- dollars monthly. Until I see some actual numbers I will keep this at $100 and pay any leftover money here toward my loans.

Internet in this area is a frustrating monopoly. That $70/month is AFTER I called and got them to knock off $10/month. Oh well. Don't have cable or a landline. When it is time to renew my phone contract I am going to see if that can come down a little- what is reasonable to pay for a smartphone plan?

I tend to use my debit card for everything and keep an eye on my spending online, but I have never budgeted strictly in divided categories (Christmas, eating out vs groceries, etc). I saved my emergency fund by just doing all my banking from one account, trying to behave frugally, and letting the unspent extra build up (hence the unbudgeted "cushion" category and brand new “recurring expenses” amount, which is really just a guess).

At least for the first month as I test out the new budget, my debt repayment plan is to use the unspent funds left over in each category at the end of the month as well as any extra windfalls/snowflakes. I was able to do some extra side work recently and should be getting $600 from that, although it's hard to predict when the check will actually be mailed. That will take a big chunk out of my first mini-goal: paying off the roughly $1000 in interest due on the Gradplus loan before payments start being applied to principle. This makes me really impatient to come up with another $400 to get going! Should definitely be doable.

On a different note, thanks to all of the brave men and women who give up their time and personal safety to protect the US! Happy Memorial Day!

Longtime reader, first time blogger. I love reading these blogs for inspiration, and I am hoping that starting one will be a way to hold myself accountable as I get serious about my debt repayment goals.

The situation: Graduated debt-free from undergrad thanks to generous help from my parents. Took out loans for professional school totaling about $240,000 (with the in-state discount!) and graduated a couple years ago. After graduation I started a training job that will last for several years at relatively modest pay, followed by a significant jump after all training is complete. I was hired at a good salary (a little under $50K/yr), but had to move for my job to an expensive city with high cost of living, where rent ate up a huge portion of my income. I totally deferred one small loan from a private group with a very low interest rate (this is allowed for up to 5 years) and put my federal loans into income-based repayment, which has kept them in good standing but isn’t touching the principle. I recently found a much cheaper (for the area) apartment and moved to free up some extra money each month.

This is the only debt I’ve ever had and it needs to go! I feel like it limits my retirement savings and my general sense of freedom. With no dependents to take care of right now, I have a great opportunity to buckle down and set myself up for a more secure future.

I currently have a paid-for car with over 100,000 miles on it that is thankfully still running well and a good emergency fund (can cover 6 months of expenses plus a small extra cushion to reflect the fact that my car is well over 10 years old with a ton of miles and you never know). I have a Roth IRA that I started with my very first summer job at age 15 but have not been funding it consistently since college, which also has to change! My employer does not offer any type of match for retirement savings and the investment vehicles they do offer for automatic withholdings for are significantly less attractive than a Roth IRA due to the management fees. They do offer health, dental, and vision benefits for a reasonable rate.

All payments are applied first to interest, then to principle, so my IBR payments are not making any headway on actually getting out of the hole. I also think the interest rates are a little shocking- this much educational debt is essentially a mortgage, and 7.5% seems a little harsh, Uncle Sam! Talking to older colleagues, many of them mentioned that their loan rates a couple decades ago were more like 2-3%. Feeling like you are being gouged is certainly more motivation to pay if off quickly, I guess.

My first goal is to make extra payments to the GradPlus loan, both because the rate is higher and because it is small enough I could realistically start seeing some progress in paying off the principle to keep me motivated. I also plan to start contributing to my Roth IRA again- it’s ridiculous not to when you consider the time value of money at my age (under 30).

I'm still tweaking my new budget and will probably post that at a later date.